State
regulators are allowing Idaho Power Company and the developer of a solar
project seven days to submit an amended sales agreement that corrects
acknowledged mathematical errors in the current proposed agreement.

Idaho Power,
Interconnect Solar Development and staff from the Idaho Public Utilities
Commission agree there are computational errors in the proposed sales 25-year
sales agreement between the utility and the developer of a 20-megawatt photovoltaic
solar project near Murphy in Owyhee County.

The current
agreement proposes that Idaho Power pay a $105.25 per megawatt-hour levelized
over 25 years to Interconnect Solar. The cost of that power is passed on to ratepayers.
After the agreement was proposed to the commission, Idaho Power, responding to
commission staff production requests, identified errors that, if corrected,
would result in a price of $94.59 per MWh.

Interconnect
Solar argues commission staff has introduced methodologies for computing prices
for wind and solar projects that should be addressed in a separate case now
pending before the commission that addresses many of the same issues. Further,
Interconnect says the computational error should not be corrected because other
considerations such as ownership of renewable energy credits (green tags) and
carbon offsets were negotiated based on the $105.25 per MWh calculation.Interconnect Solar states that the $94.59 per
MWh price would render the project no longer viable.

The
commission disagreed with Interconnect Solar’s request that the commission
overlook the errors in light of the totality of an agreement that was
successfully negotiated by both the utility and the developer. The commission
said it would “not be fulfilling its role of ensuring just and reasonable rates
if it approved an agreement that contained a known computational error.”

The
commission said it will give the participants until Sept. 27 to propose a
corrected price before making a final determination on the entire
agreement.

Interconnect
Solar is a qualifying facility under the provisions of PURPA, the federal
Public Utility Regulatory Policies Act of 1978. PURPA requires electric
utilities to offer to buy power produced by qualifying small power producers or
cogenerators. The proposed rate for the project is based on avoided cost – the cost
Idaho Power avoids by not having to generate the power itself or buying it from
another source. It is the first wind or solar project proposed since a February
order by the Idaho Public Utilities Commission that requires wind and solar
developers larger than 100 kilowatts to negotiate the avoided-cost rate rather
than rely on the commission’s published avoided cost rate.

The parties
are proposing to share 50-50 the revenue received from the sale of Renewable
Energy Credits attributable to the project.

A
full text of the commission’s order, along with other documents related to this
case, is available on the commission’s Web site at www.puc.idaho.gov. Click on “File Room”
and then on “Electric Cases” and scroll down to the above case number.